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Pensions Update 134

The content of this page is based on our understanding of how pensions worked before A-Day, the 6 April 2006, and is provided for reference only.

The Retirement Benefits (Information Powers) (Amendment) Regulations, SI 2002 No 3006

This Update explains the new regulations which came fully into effect on 6/4/03.

These regulations amended The Retirement Benefits Schemes (Information Powers) Regulations 1995 – SI 1995/3103.

The main impact of these regulations relate to the reporting requirements for transfers although various other minor amendments were also made.

Reporting Requirements for Transfers

Previously HM Revenue and Customs (HMRC) procedures meant that any transfer either to or from a SSAS scheme had to be reported to HMRC in order that agreement to the transfer could be granted.

From the 20 December 2002, until 6 April 2003 when the Regulations came fully into force, there was a change to HMRC procedures. Between these dates only transfers either to or from a SSAS that either individually or with any other transfer payments made from the same scheme, for the same member, in the previous 364 days, totalled £250,000 or more had to be notified to HMRC. This definition included transfers of pension credits and also the assignment of a policy into a member’s name where the policy did not provide benefits immediately.

From 6 April 2003, when the amended Regulations came fully into force new transfer reporting requirements were also introduced. These apply to all Occupational Pension Schemes, including SSASs. A table of requirements is given at the end of this analysis. The amended regulations ensure that:

the responsibility for producing transfer reports lies with the scheme administrator for transfers to and from schemes and with the insurance company for deferred annuities (including assigned policies). A new reporting form was also created by HMRC for this purpose – form PS7050.
HMRC also reserve the right to ask further information on any transfer notified on the PS7050 report and will normally do this within 2 years after submission of the report if the information supplied is incorrect.
Transfers before scheme approval, transfers to schemes with conditional approval, overseas transfers and bulk transfers continue to require prior clearance from HMRC - the new regulations did not change these requirements.

Electronic Communication

The new regulations also introduced the option for information to be supplied in electronic format subject to an agreed form and delivery. This is still very much under development with HMRC and will not be available for the foreseeable future.

OEICS

The definition of an unlisted company also changed to remove OEICS. This allows trustees of a SSAS to hold shares in an OEIC without the need to report this to HMRC.

Approved Schemes

The definition of an ‘approved scheme’ was extended to include schemes that had previously been approved. This introduced a reporting requirement for any tax liability under ICTA 1988 for schemes which have lost approval (sections 598 – Repayment of employees contributions, 599, 599A commutation of entire pension fund, and 601 payments from schemes to employers). Existing report forms 1(SF) and 2(SF) should be used for this purpose. Inspection powers were also extended so that information could be requested by HMRC about schemes which have lost approval.

Clarifications

Various amendments to the original Regulations were also made where they were previously unclear:

The definition of a SSAS changed to only those schemes which are approved or seeking approval. This prevents SSAS transactions taking place before the application for HMRC approval is made.
The definition of a Controlling Director was amended to make it clear that the normal 10-year rule applies.
The reporting date for special contributions paid by Employers was clarified as 180 days after the end of the tax year.
Under inspection of records when an audit inspection notice is issued by HMRC it does not have to specify the schemes that will be audited.

What Transfers Should be Reported?

Transfers out (regulation 11A)

Transfers in (regulation 11B)

Any transfer payment made from

a scheme which is approved, or

a scheme which is seeking approval, or

a relevant statutory scheme, or

a deferred annuity contract (a policy that does not provide immediate benefits)

and the transfer is made to any other source except

a relevant statutory scheme, or

an approved statutory scheme, or

an annuity contract providing immediate benefits

and the value of the transfer is either

£250,000 or more, or

when added together with any other transfer payments made from the same scheme, for the same member, in the previous 364 days is £250,000 or more.

This also includes :-

transfers of pension credits (benefits for an ex-spouse acquired from a pension sharing order on divorce), and

the assignment of a policy into the member's name where a policy does not provide benefits immediately (please refer to the Occupational Pension Scheme Practice Notes (OPS PNs) and in particular, note 10.43). The OPS PNs can be found using the hyperlink at the end of this document.

Transfers need to be reported in accordance with regulation 11B where the transfer meets all the following criteria.

The transfer payment is received by

a scheme which is approved (but not an approved statutory scheme), or

a deferred annuity contract (a policy that does not provide immediate benefits)

Where the value of the transfer when added together with any other transfer payments made to the same scheme, for the same member, in the previous 364 days is £250,000 or more, and

The transfer payment is not one that should have been reported by the scheme making the transfer payment under regulation 11A.

This also includes:-

transfers of pension credits (benefits for an ex-spouse acquired from a pension sharing order on divorce), and

the assignment of a policy into the member's name where the policy does not provide benefits immediately (OPS PN 10.43 refers).

Transfers out (regulation 11A)	Transfers in (regulation 11B)
Any transfer payment made from a scheme which is approved, or a scheme which is seeking approval, or a relevant statutory scheme, or a deferred annuity contract (a policy that does not provide immediate benefits) and the transfer is made to any other source except a relevant statutory scheme, or an approved statutory scheme, or an annuity contract providing immediate benefits and the value of the transfer is either £250,000 or more, or when added together with any other transfer payments made from the same scheme, for the same member, in the previous 364 days is £250,000 or more. This also includes :- transfers of pension credits (benefits for an ex-spouse acquired from a pension sharing order on divorce), and the assignment of a policy into the member's name where a policy does not provide benefits immediately (please refer to the Occupational Pension Scheme Practice Notes (OPS PNs) and in particular, note 10.43). The OPS PNs can be found using the hyperlink at the end of this document.	Transfers need to be reported in accordance with regulation 11B where the transfer meets all the following criteria. The transfer payment is received by a scheme which is approved (but not an approved statutory scheme), or a deferred annuity contract (a policy that does not provide immediate benefits) Where the value of the transfer when added together with any other transfer payments made to the same scheme, for the same member, in the previous 364 days is £250,000 or more, and The transfer payment is not one that should have been reported by the scheme making the transfer payment under regulation 11A. This also includes:- transfers of pension credits (benefits for an ex-spouse acquired from a pension sharing order on divorce), and the assignment of a policy into the member's name where the policy does not provide benefits immediately (OPS PN 10.43 refers).

Which transfers do not need to be reported under these regulations?

Reports of transfers out under regulation 11A do not need to be made in the following circumstances.

Reports of transfers in under regulation 11B do not need to be made in the following circumstances.

Where the value of the transfer is less than £250,000, and when added to any other transfer made from the scheme for the member in the previous 364 days is less than £250,000.

Where the transfer is made to a relevant statutory scheme, an approved statutory scheme, or to an annuity contract providing immediate benefits.

Bulk/block transfers (see OPS PN 10.36) are not covered by the regulations. These transfers should continue to reported in accordance with OPS PN 10.36

Bulk assignments of policies e.g. on winding up of a pension scheme, also do not need to be reported.

Where a scheme approved under Chapter 1 Part XIV of The Income and Corporation Taxes Act 1988 (ICTA 1988) wholly or partly converts to approval under Chapter IV Part XIV ICTA 1988 this is not a transfer. As such it is not covered by the reporting requirements.

Assignment of a policy into the member's name where a policy provides immediate benefits.

Schemes, which have made application for approval but have not yet been granted approval, are not covered by the Regulations. This is because such schemes cannot accept a transfer into the scheme without prior agreement of HMRC - OPS PN 10.24 (h) refers.

Where the value of the transfer is less than £250,000 and when added to the value of any transfer received by the scheme for the member in the previous 364 days is less than £250,000.

Where the transfer is received by a relevant statutory scheme, an approved statutory scheme, or an annuity contract providing immediate benefits.

Where the transfer should have been reported by the scheme making the transfer in accordance with regulation 11A

Bulk/block transfers (see OPS PN 10.36) - because these transfers continue to be reported in accordance with OPS PN 10.36

Receipt of bulk assignment policies, e.g. when an employer is reorganising their pension arrangements, does not need to be reported.

Where a scheme approved under Chapter 1 Part XIV ICTA 1988 wholly or partly converts to approval under Chapter IV Part XIV ICTA 1988 this is not a transfer. As such it is not covered by the reporting requirements.

Reports of transfers out under regulation 11A do not need to be made in the following circumstances.	Reports of transfers in under regulation 11B do not need to be made in the following circumstances.
Where the value of the transfer is less than £250,000, and when added to any other transfer made from the scheme for the member in the previous 364 days is less than £250,000. Where the transfer is made to a relevant statutory scheme, an approved statutory scheme, or to an annuity contract providing immediate benefits. Bulk/block transfers (see OPS PN 10.36) are not covered by the regulations. These transfers should continue to reported in accordance with OPS PN 10.36 Bulk assignments of policies e.g. on winding up of a pension scheme, also do not need to be reported. Where a scheme approved under Chapter 1 Part XIV of The Income and Corporation Taxes Act 1988 (ICTA 1988) wholly or partly converts to approval under Chapter IV Part XIV ICTA 1988 this is not a transfer. As such it is not covered by the reporting requirements. Assignment of a policy into the member's name where a policy provides immediate benefits.	Schemes, which have made application for approval but have not yet been granted approval, are not covered by the Regulations. This is because such schemes cannot accept a transfer into the scheme without prior agreement of HMRC - OPS PN 10.24 (h) refers. Where the value of the transfer is less than £250,000 and when added to the value of any transfer received by the scheme for the member in the previous 364 days is less than £250,000. Where the transfer is received by a relevant statutory scheme, an approved statutory scheme, or an annuity contract providing immediate benefits. Where the transfer should have been reported by the scheme making the transfer in accordance with regulation 11A Bulk/block transfers (see OPS PN 10.36) - because these transfers continue to be reported in accordance with OPS PN 10.36 Receipt of bulk assignment policies, e.g. when an employer is reorganising their pension arrangements, does not need to be reported. Where a scheme approved under Chapter 1 Part XIV ICTA 1988 wholly or partly converts to approval under Chapter IV Part XIV ICTA 1988 this is not a transfer. As such it is not covered by the reporting requirements.

From 6 April 2003 when and how should transfer reports be made and by who?

Reports should be made to HMRC within 28 days after the date of transfer out/receipt of transfer. For an approved scheme, a scheme seeking approval and a relevant statutory scheme the scheme administrator is required to make the transfer report. For a deferred annuity contract (including assigned policies) the insurance company is required to make the transfer report.
Transfers should be reported on form PS7050.

Form PS7050 and the OPS PNs can be found using the hyperlinks below:-

PS7050

OPS PNs

Updated 20 October 2005

Published 23 April 2003

For professional advisers only

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